Intel 14nm transition in trouble

Intel has announced plans to indefinitely shelve Fab 42 in Chandler, Arizona and instead it plans to upgrade its existing fabs in order to be able to produce enough 14nm chips. This is not a great sign for a company that missed the mobile phone and tablet revolution and has an advantage over ARM alliance in the faster transition to a new manufacturing process. You can read about the mothballed Arizona fab here.

Intel had troubles shifting from 32nm to 22nm and it took longer than the company expected, but currently it produces its whole Haswell generation using the 22nm process without any major problems. The next transition, expected in the second half of 2014, is the transition to 14nm and next generation Broadwell chips. It turns out that desktop remains covered by 22nm Haswell refresh parts, while the 14nm process stays reserved for Broadwell mobile chips and future mobile phone and tablet Atom based chips, e.g. Airmont.

Things are not looking bright, as 10nm seems to be even harder and capital spending needed to transition to each next generation process is growing exponentially. GlobalFoundries promised 20nm chips in 2014 without any fixed date and TSMC will have some 20nm chips for some high end devices from Qualcomm and possibly for Nvidia and AMD in the graphics space. The 20nm graphics parts might actually begin to happen even beyond 2014, but this is not something we cannot confirm at this point.

Intel is still doing fine, as the company can buy its way into tablet market and plans to sell up to 40 million tablet parts in 2014. The reason is quite simple. It has plenty of money to throw around in the form of incredibly large MDFs (Market Development Funds) that it can channel to loyal customers who buy a lot of its chips.

Being Intel gives you an advantage over major companies such as e.g. Dell or HP and a like as, these companies need your chips across their whole portfolio, from servers, to desktops, notebooks, tablets and eventually phones. We are sure that Intel will be making offers that manufacturers cannot refuse in order to boost its tablet presence and soften the hard hearts of investors and analysts.